Free Software vs. the Tax Man

Slashdot recently linked to this comparison of the cost of Windows in Brazil and the US. This brings to mind a point I think I’ve seen Mike make: beyond the general point that libertarians should celebrate free software because it’s an example of non-coercive production of public goods, libertarians also have reasons to like free software because it’s more resistant to the coercive power of the state. When software is produced by a commercial company and sold in the marketplace, it’s relatively easy for the state to tax and regulate it. Commercial companies tend to be reflexively law-abiding, and they can afford the lawyers necessary to collect taxes or comply with complex regulatory schemes.

In contrast, free software will prove strongly resistant to state interference. Because virtually everyone associated with a free software project is a volunteer, the state cannot easily compel them to participate in tax and regulatory schemes. Such projects are likely to react to any attempt to tax or regulate them is likely to be met with passive resistance: people will stop contributing entirely rather than waste time dealing with the government.

Hence, free software thus has the salutary effect of depriving the state of tax revenue. But even better, free software is likely to prove extremely resistant to state efforts to build privacy-violating features into software systems. CALEA requires telecom infrastructure to include hooks for eavesdropping by government officials, but it will prove extremely difficult to get similar hooks added to free software. No one is likely to volunteer to add such a “feature”, and even if the state added it itself, it wouldn’t have any realistic way to force people to use its version.